CSRC head vows stronger ef­fort on en­force­ment

China Daily (Hong Kong) - - BUSINESS COMPANIES - By XIE YU in Shang­hai xieyu@chi­nadaily.com.cn

Fol­low­ing up on strong words about en­force­ment, the head of the China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion, Xiao Gang, said his agency would dou­ble its in­ves­tiga­tive team with 600 new staff.

The plan, dis­closed by Xiao on the agency’s web­site on Tues­day, is widely seen as a sig­nal that the CSRC is tak­ing se­ri­ous steps to ad­dress de­fi­cien­cies in the cap­i­tal mar­kets.

Ear­lier at an in­ter­nal work con­fer­ence, Xiao urged his staff to step up their ef­forts in in­ves­ti­ga­tion and en­force­ment.

His call came amid the fall­out of the Ever­bright Se­cu­ri­ties Co Ltd trad­ing er­ror last week, which ex­posed ir­reg­u­lar­i­ties and struc­tural flaws in the in­dus­try.

Xiao told the work con­fer­ence that CSRC in­ves­ti­ga­tors should “suf­fi­ciently use power both in and out of the sys­tem, es­pe­cially pub­lic se­cu­rity or­gans in all lev­els, to en­sure the safety of in­ves­ti­ga­tors”. The con­fer­ence dis­cussed new guide­lines on in­ves­ti­ga­tions and law en­force­ment in­volv­ing the stock and fu­tures mar­kets.

Xiao said the 600 new in­ves­ti­ga­tors will be sent to six eq­uity and fu­tures ex­changes.

“In­ves­ti­ga­tion and hear­ing of a case should be fin­ished within one year. Ex­ceed­ing the time limit re­quires clear ex­pla­na­tion,” he said.

An­a­lysts said Xiao may have re­ceived higher- level sup­port to get around bu­reau­cratic and bud­get con­straints The CSRC re­ports di­rectly to the State Coun­cil, China’s cabi­net.

In­vestors want the CSRC to re­lease the re­sults of the probe into last Fri­day’s “fat fin­ger” in­ci­dent in­volv­ing Ever­bright as soon as pos­si­ble.

“I don’t un­der­stand what takes so long for the CSRC to de­cide whether Ever­bright ma­nip­u­lated the mar­ket. In my opin­ion, the an­swer is crys­tal clear,” said Gen Shuang, se­nior part­ner of the Guangzhou-based Best­found Law Firm.

She said Ever­bright had amassed cap­i­tal to buy cer­tain shares, which matches the def­i­ni­tion for mar­ket ma­nip­u­la­tion un­der China’s Se­cu­ri­ties Law, no mat­ter it was in­ten­tional or not.

Gen noted that in China, courts can’t ac­cept law­suits from those claim­ing to be harmed by the in­ci­dent, un­less the CSRC char­ac­ter­izes what Ever­bright did as “mar­ket ma­nip­u­la­tion”.

She said the CSRC “should dis­close its progress dur­ing the process. At least they should tell peo­ple the di­rec­tion of their in­ves­ti­ga­tion,” she added.

The un­in­tended pur­chases us­ing 7.2 bil­lion yuan ($1.17 bil­lion) from Ever­bright drove the bench­mark Shang­hai Com­pos­ite In­dex up 5 per­cent in two min­utes.

The move at­tracted many small in­vestors, who didn’t know the in­dex had surged on a sys­tem er­ror. Short sell­ers also ex­pe­ri­enced large losses.

The CSRC on Sun­day said it had started an in­ves­ti­ga­tion. It didn’t say ex­actly when the re­sults would be re­leased.

“I am a lit­tle con­cerned what will hap­pen if the in­ves­ti­ga­tion reaches some­where that re­quires power be­yond the CSRC. I do not see many suc­cess­ful cases based on co­op­er­a­tion be­tween the se­cu­ri­ties watch­dog and crim­i­nal in­ves­ti­ga­tion au­thor­i­ties in China,” said Xu Zhong, a gen­eral part­ner of a pri­vate eq­uity fund in Chengdu, Sichuan.

Xiao re­cently pub­lished an ar­ti­cle in Qiushi Jour­nal, a po­lit­i­cal pe­ri­od­i­cal run by the Cen­tral Party School, say­ing that his agency’s in­ves­ti­ga­tors face prob­lems rang­ing from de­tec­tion to ev­i­dence gath­er­ing to con­vic­tion — and even “vi­o­lent re­sis­tance”.

The Shang­hai Com­pos­ite fell 0.62 per­cent to 2,072.60 on Tues­day. Bro­ker­ages fell for a sec­ond day on con­cerns about weaker prof­its and stricter su­per­vi­sion af­ter the Ever­bright in­ci­dent.

Ever­bright it­self closed limit- down af­ter re­sum­ing trade on Tues­day.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.